Experts say tense Sino-Japan ties putting business in danger

Amid escalating tensions between China and Japan fueled by Tokyo's erroneous remarks regarding China's Taiwan, experts warned that if the Japanese administration continues down the wrong path, it is endangering bilateral economic ties that have great significance for both nations.

In response to Japanese Prime Minister Sanae Takaichi's claim that a Taiwan emergency constitutes a "survival-threatening situation" for Japan — and her refusal to retract these erroneous remarks — China has halted Japanese seafood imports, authorities have suspended the release of two Japanese films and major Chinese airlines have canceled flights to Japan.

Hidetoshi Tashiro, a Japanese economist, said that Takaichi's remarks could trigger serious fallout, with China already warning its citizens against travel and study in Japan and tour cancellations underway.

Tourism accounts for around 7 percent of Japan's overall GDP, according to the World Travel and Tourism Council.

Meanwhile, statistics from the Japan National Tourism Organization showed that visitor arrivals from the Chinese mainland and the Hong Kong Special Administrative Region accounted for nearly 30 percent of the total during the January-October period of this year.

"Even more serious is that companies in both Japan and China may come to share the expectation that bilateral relations will become unstable going forward, which could dampen their willingness to engage in trade and investment between the two countries. I strongly hope that the Japanese side will refrain from provocations — what China calls 'playing with fire' — and avoid unnecessarily heightening tensions," said Tashiro.

As Japan's largest trading partner, China represents a critically important market for a wide range of Japanese industries, including auto parts, precision machinery, consumer goods and chemical products.

The General Administration of Customs said China is Japan's biggest source of imports. In 2024, the total trade volume between China and Japan reached $308.3 billion, with China's imports from Japan amounting to $156.25 billion.

As the engines of global growth sputter, Japan's economy is grappling with a distinct lack of momentum and the persistent threat of stagflation. Whether it can break free from this trend of sluggishness remains an open question, said Lyu Kejian, vice-president of Chinese Association for Japanese Economic Studies.

"Any significant disruption to trade ties with China would deliver a direct shock to an economy already struggling to find its footing," Lyu said.

In August, the Japanese government revised down its real economic growth forecast for the current fiscal year from April 2025 to March 2026, from an earlier projection of 1.2 percent to 0.7 percent due to downward pressure from US tariff policies and weak consumer spending.

"If not for political 'noise', there is no reason Japan-China economic and trade relations should not continue to grow," said Tashiro.

At a time when the United States is falling into isolationism and seeking to undermine the free-trade system, the development of free trade and people-to-people exchanges between Japan and China would benefit not only both countries, but also the entire world, he added.

As political waves ripple across the Japanese business community, executives called for Tokyo to maintain rational communication and pragmatic cooperation with Beijing.

Tetsuro Homma, executive vice-president of Panasonic, said that China is not only a consumer market or a manufacturing powerhouse, but also an innovation and engineering hub.

"For Japanese companies, strengthening collaboration with Chinese supply chain partners is crucial. It enables us to deliver quality products to global consumers at more competitive prices," Homma said.

The vast majority of Japanese enterprises maintain long-term confidence in their development prospects in China and remain committed to growing their roots in the Chinese market, he added.

The China International Import Expo held in Shanghai earlier this month saw a total of 329 Japanese companies participating, 1.6 times that of last year's event, said the China International Import Expo Bureau.

A survey released by the Japanese Chamber of Commerce and Industry in China in August showed that more than half of responding Japanese firms plan to either increase or maintain their investments in China this year, while 54 percent view the country as their most important or one of their top three markets.

Hideki Ozawa, executive vice-president of Canon and president and CEO of Canon China, said China is a pivotal node in global industrial and supply chains.

Ozawa said the company's China-anchored ecosystem, encompassing research and development, manufacturing and services, aligns with China's economic priorities.

"Through rigorous supplier management and capability-building initiatives, we collaborate with domestic partners to build an efficient and globally competitive value chain. We maintain confidence in the long-term resilience of the Chinese economy, where its unparalleled market scale, mature industrial ecosystems and continuously optimized business environment provide a proven foundation for innovation and growth," he added.